Reasonably libertarian

Minister for the Federal Territories “is peeved” that local traders and hawkers in Kuala Lumpur are subletting their licences to foreigners. He prefers the licence owners to run their business to them renting it out to foreigners.[1] That is a value judgment and based on his preference, there is a problem.

I also see this phenomenon as a problem but the word that catches my eyes is sublet, and not foreigners. I do not mind the origin of the license users unlike the Minister, and others who harbor xenophobic sentiment.

It is likely that the licenses are in the hand of those who do not value it the most. If they were, then there would probably be no rent-seeking activity. If they were, the owners of the license would use it rather than redistribute it to others.

I have a solution for my concern.

Auction it to those who value it the most, regardless of origin. Change the value and adopt the best market mechanism to allocate the licenses. This is likely to address the problem of subletting. While at it, the authority — the City Hall, which is under the purview of the Minister — get to get more revenue to boot.

[1] — KUALA LUMPUR, Dec 4 — Federal Territories and Urban Wellbeing Minister Datuk Raja Nong Chik Raja Zainal Abidin is peeved that there are still traders and hawkers in the city sub-letting their licences to foreigners.

“Not only Malays are doing this but also Chinese traders in Petaling Street and Indians in Brickfields. It seems to have become a 1 Malaysia,” he told reporters after attending the ministry’s educational assistance programme for the poor at the Chinese Assembly Hall here today.

2 Responses to “[2284] Of a simple solution to Raja Nong Chik’s problem”

It’s the same story with countless Bazaar Ramadan around the country, only difference is that it’s the “bigshots” who are subletting.
My belief is that it’s probably more viable to sublet to foreigners, but for the Bazaars, it’s more of a extortion scheme.

on 06 Dec 2010 at 13:51 Motorola

I think the idea of auctioning has been mooted before, but every time it was raised the traders and NGOs themselves would cry foul, saying that an auction would not give the poorer traders a chance to compete. Thay say that only the big towkays would be able to buy the licenses then.